CLIMATE

Utilities ask Supreme Court to decide if GHGs are a 'nuisance'

Gabriel Nelson, E&E reporter

E&ENews PM: Wednesday, August 4, 2010

Four of the nation's largest utilities have urged the Supreme Court to reverse a ruling that could lead courts to limit greenhouse gas emissions under common law, saying the decision makes no sense while U.S. EPA is moving forward with climate regulations under the Clean Air Act.

In AEP v. Connecticut, two judges from the 2nd U.S. Circuit Court of Appeals sided last year with environmental groups, New York City and eight states. The judges agreed that climate change was a public nuisance, allowing the plaintiffs to proceed with a lawsuit that sought to impose caps on greenhouse gas emissions from power plants.

American Electric Power Co. Inc., Duke Energy Corp., Southern Co. and Xcel Energy Inc. filed a petition Monday asking for review of the decision. Climate change is the type of political question that must be answered by Congress, they say, and if EPA is moving forward with regulations under the Clean Air Act, courts have no reason to step in.

"The ramifications of this holding, if it is allowed to stand, are staggering," the petition says. "Virtually every entity and industry in the world is responsible for some emissions of carbon dioxide and is thus a potential defendant in climate change nuisance actions under the theory of this case."

Nuisance claims are a long-standing fixture of common law, used for centuries to settle disputes with neighbors over annoyances such as overgrown trees and foul smells. In the absence of congressional action on climate change, environmental groups argue, nuisance cases will allow affected people to recoup their losses from those whose emissions are responsible.

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In the AEP case, the circuit court concluded that "you can't just wish these cases away because they're controversial or raise political questions," said Robert Percival, director of the University of Maryland's environmental law program. "They do raise what has for centuries been a traditional common law nuisance claim" (Greenwire, Dec. 17, 2009).

In their petition, the four utilities said the potential for nuisance-based lawsuits would add another element of uncertainty as EPA crafts climate regulations and Congress mulls over legislation. Because each of the companies is subject to new EPA rules on greenhouse gases from stationary sources, they say, the federal government is already starting to outline their responsibility for global warming.

If the Supreme Court decides not to review the case, the petition says, "a single judge could set emissions standards for regulated utilities across the country -- or, as here, for just that subset of utilities that the plaintiffs have arbitrarily chosen to sue."

Though the Senate looks increasingly unlikely to pass a climate bill this year, AEP spokeswoman Melissa McHenry said the utility still wants Congress to explicitly address greenhouse gases. The company supported the economywide cap-and-trade program that was included in the energy and climate bill passed by the House, though it opposed the utility-only approach that was preferred by some in the Senate.

"Ideally, legislation would be passed and that would make it kind of a moot point," McHenry said, referring to the lawsuit.

'Balkanization' of standards

The Supreme Court could decide as early as this fall whether to review the case. While the high court agrees to hear less than 1 percent of all petitions, legal experts have suggested that the wide-reaching implications of climate cases and the disagreement among appeals courts could make the petition irresistible.

A similar case is working its way through the 9th Circuit, while the 5th Circuit left intact a decision to dismiss a nuisance lawsuit. Though the 5th Circuit precedent was set because of a procedural snag, there is now an effective split between the 2nd and 5th circuits.

Just last week, the 4th Circuit tossed out a ruling that would have required the Tennessee Valley Authority to upgrade its coal-fired power plants because their emissions crossed state lines. Though that case dealt with conventional air pollution, experts say it shows the direction that the climate litigation is likely heading.

In an opinion for the court, Judge J. Harvie Wilkinson III said it would make no sense to apply common law when EPA had granted federal permits for those emissions.

"If allowed to stand, the injunction would encourage courts to use vague public nuisance standards to scuttle the nation's carefully created system for accommodating the need for energy production and the need for clean air," Wilkinson wrote. "The result would be a balkanization of clean air regulations and a confused patchwork of standards, to the detriment of industry and the environment alike."

With the release of EPA's "tailoring" rule, which outlines the types of facilities that will be subject to greenhouse gas emissions standards, utilities could contend that "federal rules have displaced the common law of nuisance," said Seth Jaffe, a Boston-based litigator at Foley Hoag LLP, in a recent blog post.

"I think that they will probably win that argument," he wrote. "They certainly should."